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April 20, 2014

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The Economy:

Proceeding with caution

Union Park developers still committed, but delays are possible

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Leila Navidi

Looking south over the mostly vacant Union Park parcel in Las Vegas, the Lou Ruvo Brain Institute is under construction in the center. It’s the only project of the $6 billion, 61-acre development that is being built. Developers say they’re committed to the components, but financing remains a concern.

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Construction continues on the Lou Ruvo Brain Institute at Grand Central Parkway and Bonneville Avenue in Las Vegas. When it's completed in about a year, it will house researchers who are trying to find cures for brain disorders.

Las Vegas has long been planning Union Park as an extraordinary development: a gleaming new downtown, adjacent to the current one and built from the ground up.

With the recent drumbeat of dour economic news, it may not seem like the time for a project of Union Park’s 61-acre, $6 billion scope. And to a degree, the economy has affected Union Park.

One of its six major business and civic developments has been delayed a year, and at least one more, a top official confirms, may soon ask for a similar postponement from the City Council.

Despite the economy, it appears that Union Park, one of the chief legacies of Mayor Oscar Goodman, is still on track.

City officials and those of five of the six developments say trepidation because of the economy is understandable. But developers are increasingly committed to Union Park, they say, because they know once the economy rebounds, odds are strong it will become a vibrant, multifaceted neighborhood.

“This is not a short-term project, it’s a long-term project,” said Newland Senior Vice President and Development Director Rita Brandin. “Union Park is moving forward. Activity is ongoing.”

Union Park officials recently touted progress made in 2008.

Most obvious is construction on the Lou Ruvo Brain Institute, the Frank Gehry-designed medical center that will house researchers trying to find cures for brain dysfunctions. The building on the southwestern corner of the park is now less than a year from completion. Several managers and administrators have moved into fourth-floor office space.

This week, at the entrance to the Life Activities Center — an auditorium under construction in front of the institute’s office building that will host speakers and other public events — curving white beams stood at odd angles. Steel grids lay on the ground, waiting to be hoisted atop the high-tech structure, which will contain windows with photo cells that allow in just the right amount of light.

“We’ve looked at Union Park as a venture opportunity — and a good one,” said Maureen Peckman, chief operating officer of the Keep Memory Alive organization, the institute’s holding company. “It’s a lifetime commitment.”

Union Park officials also tout new infrastructure on the southern portion of the property, as well as the recognition from the U.S. Green Building Council that its developers had met certain standards for protecting the environment.

From the Ruvo institute’s fourth floor looking north, Union Park is mostly empty, dotted with construction trailers, earth-moving machines and piles of dirt.

Near the institute, ground is to be broken next on the Smith Center for the Performing Arts, Las Vegas’ first comprehensive cultural center and the centerpiece of Union Park.

Developers are set to start construction by the end of March. Officials with the center say they are planning for a 32-month construction period and a November 2011 opening.

Two top Smith Center officials, Myron Martin and Don Snyder, president and chairman respectively of the Las Vegas Performing Arts Center Foundation, said most everything is in place — including final construction documents that detail everything about how the $360 million structure will be built — except the financing.

Part of the center’s funding is coming from the city’s share of a Clark County tax on rental car drivers, they said. They’re also relying on financing through Bank of America and private fundraising. All of it needs to be in place, Snyder said, before groundbreaking.

“We’re working harder than ever,” he added. “It’s reasonable to expect in this market that certain elements of the time line will have slipped.”

Time lines for other major developments — the World Jewelry Center, a boutique hotel designed by celebrity chef Charlie Palmer, a casino yet to be named and a series of residential units — are less clear.

Several months ago, Newland Communities, which is developing the park’s residential properties and serving as the city’s designated project manager for the rest of the park, got approval from the City Council to delay its housing projects for a year. The company cited the dried-up housing market.

It appears the Charlie Palmer Hotel is moving forward. Snyder said he’s heard that hotel officials want its opening to coincide with that of the Smith center. Parts of the hotel will overlook the center.

During a Nov. 20 dinner with Goodman at the Charlie Palmer Steak restaurant at the Four Seasons, Palmer confirmed that he was “totally committed to the project,” Goodman said at a recent news conference.

“There was no indication that the project was going to be put on hold,” Goodman said. “But at the same time, certainly there were discussions about how difficult it is to get debt financing … There’s plenty of equity, but there’s very little debt available.”

In a statement, Richard Kaufman, president of City-Core Development and a partner with The Charlie Palmer Group, used similar language.

“We remain committed to the project, the location and the city,” Kaufman said. “We believe the product we’re creating — a world class boutique hotel with 426 rooms and signature Charlie Palmer amenities — is something that doesn’t exist in Las Vegas today. Our studies show significant demand for what we’re planning, now and when the hotel opens.”

And Bill Boyajian, managing director of the World Jewelry Center, he is more committed to Union Park than ever, after two years selling units in the skyscraper project.

Boyajian said he has signed 151 jewelry wholesalers, manufacturers and dealers from 24 countries to move in once the project is completed. He said another 150 businesses have expressed interest.

Given the level of enthusiasm and commitment, he said that even in a worst-case economic scenario, he could not envision scrapping the project.

And yet, Boyajian conceded that the developer he works for, Probity International, might soon ask for a revised draft development agreement from the City Council to delay the center’s late-2009 groundbreaking date by a year.

Also, Jewelry Center building plans could be reduced from 50 stories to 40 stories, or even split between two smaller buildings.

“It’s very likely we might have to stretch the project out a bit,” Boyajian said. “But we are keeping it alive.”

Scott Adams, the city’s business development director, called the credit problems confronting Union Park’s developers as “classic macroeconomics” that, within a few years, should right itself.

Adams suggested Union Park will be fully constructed within 10 years, possibly adding another five for the housing projects.

It comes down to the faith he has in the developers, he acknowledged.

“We’ve vetted them all out. They’re all rock solid,” Adams said.

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